Employer vs Employees Contribution: CBDT takes a step aback but does not leave the ground: 2nd Proviso of section 43B which provided for deduction of employer contribution to labor welfare funds only if payment is made with in time prescribed under relevant labor law was rescinded by Finance Act 2003 w.e.f. AY 2004-05 and was merged with first proviso which provided for deduction even of payment is made till due date of filing of return. Since first proviso operated was inserted w.e.f. AY 1988-89, SC in Alom Extrusions held that amendment is curative in nature. If it is applied prospectively, the person who did not pay employer contribution for so many years till AY 2004-05 and pays timely contribution for AY 2004-05 only shall stand at better footing as who paid employer contribution but after due date under relevant labor law. Hence the amendment should be applied retrospectively. Delhi High Court in AIMIL Limited, Uttrakhand High Court in Kichha Sugar Compnay, P&H High Court in Rai Agro Industries, Hemila Mills, Mark Auto Industries, held that for employees contribution also pay ment till due date of filing return shall qualify for deduction. This opinion was based on the view that relevant labor laws permit payment in grace period or after due date by charging some interest. However Gujrat High Court in Gujrat State Road Transport Corp and ITAT KOL(SB) in LKP Securities held that S.43B is not applicable to employee contribution and it is governed by express provisions of 36(1)(va). Now, CBDT in its circular has accepted the Alom Extrusion and has decided that issue of retrospective application of employer contribution shall no longer be contested and all grounds based there on shall be withdrawn/not pressed. However CBDT has in the same breath held that issue of employee contribution be armoured with whole hog.